7/20/2005Briefing: Citect's Growth and Global VisionBy Craig...

7/20/2005

Briefing: Citect's Growth and Global Vision

By Craig Resnick, ARC Advisory Group

Citect recently briefed ARC with the latest update of their global business, with specific focus on the traction they are gaining in the Americas. Founded in 1973 and based in Sydney, Australia, Citect is a supplier of industrial automation and manufacturing execution system (MES/CPM) solutions along with professional services. With revenues of $61 million AUD in 2004 and a customer base of 6000, Citect employs 370 persons and has offices in Australia, the United States, Europe, South Africa and Asia that support 6000 active users, 500 integration partners and 80 channel partners in 50 countries. Citect's HMI software solutions such as CitectSCADA, as well as their production management solutions such as CitectIIM (Industrial Information Management), are installed in industries such as mining, minerals and metals, manufacturing, food and beverage, gas pipelines, water and wastewater treatment, and power distribution.

Citect has a three year vision to continue to introduce additional solutions through expansion of their IIM solution offerings and enhancement of their HMI/SCADA product with additional reporting and historian capabilities. Specifically in the Americas, Citect's strategy also includes a direct and indirect sales channel focus, with a direct focus on strategic sales of greater than $100K, and an indirect focus on channel growth via recruitment of quality, well-capitalized partners using Citect's Full Value Partner program (FVP). This global vision and Americas channel strategy has led Citect Americas revenues and profits to grow at a projected rate of 70% and 800% respectively in 2005 versus 2004, with revenues on track to double by the end of 2005. Europe and the Americas already account for 60% of CitectSCADA sales, which is sold in the Americas via a variety of channel partners including ones recently recruited such as Graybar, Crescent Electric, and Guillevin.

The company has had several recent large projects in water and wastewater treatment such as a SCADA system upgrade for the Nashville Metro Water Services (MWS) and a water treatment plant upgrade for the Greater Cincinnati Water Works (GCWW). The MWS project scope involves an initial top-end SCADA software replacement of two older, non-supported systems incorporating HSQ Technology for wastewater collection and water distribution. Future project stages will involve upgrading the communications and RTU hardware currently in place. The GCWW project involves a top-end SCADA software replacement of a proprietary, non-supported system communicating across both Bristol Babcock in-plant and remote RTUs to upgrade all its water treatment plants and pumping facilities. These systems will utilize CitectSCADA's new version 6.0 features such as the Process Analyst visualization tool that combines trends and alarms in an integrated display to analyze disturbances and determine their root causes, and Web Client for viewing via Internet Explorer. Other major water projects in Louisiana and Virginia Beach were also discussed.

Citect reviewed some of the capabilities of their IIM solution, including CitectIIM Downtime and Metrics modules that record information associated with production downtimes, and Citect IIM analysis tools that organize data to determine the root cause of production issues. IIM applications are focused on increased uptime, process improvement, production and total capacity gains, and real-time visibility to make proactive decisions that correct production disturbances before they become problems. Citect discussed some specific IIM installations, such as BHP Billiton Iron Ore and Western Mining Corporation (WMC) Resources in Australia, Impala Platinum and De Beers in South Africa, Mitsubishi Motors in Asia, and Consol Energy's McElroy Coal Preparation Plant outside Moundsville, West Virginia. These companies are currently using CitectIIM solutions for applications such as plant downtime monitoring systems and have reported achieving substantial productivity gains. WMC reported achieving a 24% performance improvement in its underground railway haulage within days. Impala Platinum was able to reduce downtime by an hour, which translates into $1 million Rand savings. Other major projects with IBM, IDEXX Labs, and PG&E are also contributing to Citect’s success in the Americas. The company plans to release additional CitectIIM products in the next 12 months to continue their aggressive IIM growth goals, which Citect listed in their annual report as being triple-digit for the past two years. In the near future, Citect IIM will be rebranded in order to reinforce customer perception and eliminate confusion over existing and future brands.

Citect discussed its recent launch of CitectIIM Performance. Performance is the first of Citect’s suite of IIM solutions packaged as an out-of-the box product, increasing the company’s distribution capabilities. CitectIIM Performance is an analytical tool that targets improvements in Overall Equipment Effectiveness (OEE). Citect discussed some specific CitectIIM Performance applications, such as Energizer Holding's Alkaline Battery Division. The initial project consists of CitectIIM Performance providing corporate visibility of Key Performance Indicators (KPIs) into plant processes that monitor production and optimize OEE. In order to increase OEE, data generated by equipment in a production line is collected, analyzed, filtered and presented to determine the factors and root cause disturbances that slow production or impact quality. CitectIIM is being used to automate data acquisition so Energizer can see how their plant is operating in real time and identify and remedy the root causes of production disturbances. Energizer obtains real-time data and relevant information from each step of the production process instead of relying on manual data collection and analyzing the results later. This data is being integrated into continuous improvement processes and is also being used to improve yield, quality and asset utilization by spotting trends that signal bottlenecks and slowdowns.

ARC feels that one of the primary challenges for Citect going forward, both globally as well as in America, is to seize the opportunity to increase their involvement with open standards groups such as OPC, ISA-95, OAGIS, etc. Right now Citect benefits from a large library of custom drivers and 33 years of internal system integration expertise, but is not as active with the standards committees as some of their competitors. Citect has, however, become a recent OPC member. Another challenge for Citect is to increase their installed base in HMI/SCADA in North America and Europe by leveraging their Switch2Citect conversion tools to upgrade users of legacy HMI/SCADA software. This would provide a broader base from which Citect can sell its IIM solutions, as well as increase their North America and European market share in HMI/SCADA. Finally, another challenge for Citect is to find a way to clearly differentiate their IIM solutions from the competition by documenting success stories with clear metrics that manufacturers use to justify their investment and demonstrate a quick return on assets. How successfully these metrics are communicated will be directly proportional to the overall global revenue growth of their IIM solutions.